Bring Back Housing By Bringing Back Tax Shelters

Turning around real estate remains one of the biggest problems in fixing America’s economy. Investment sage Warren Buffett recently said now is a good time for investment pools to buy thousands of residential homes, fix them up, and rent them out for a good rate of return. Problem is that renting out real estate is penalized in the tax code under Section 469 passive activity rules and that put a major damper on this timely investment idea. While Congress and President Obama can’t turn around the housing market, they can fix this penalty and help it improve. Section 469 was passed to put an end to rampant use of egregious tax shelters, including real estate syndicates. Investors were deducting tax losses on non-recourse debt — in other words taking tax losses for money they might never part with, unless they had gains later on. With these non-recourse interest tax losses baked in, investors were guaranteed to win after tax.

Click here to view this article from its source.